{"id":14381,"date":"2010-10-24T08:11:24","date_gmt":"2010-10-24T12:11:24","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=14381"},"modified":"2010-10-24T08:11:24","modified_gmt":"2010-10-24T12:11:24","slug":"contracts-for-difference-cfds-vs-futures","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2010\/10\/24\/contracts-for-difference-cfds-vs-futures\/","title":{"rendered":"Contracts for Difference (CFDs) Vs Futures"},"content":{"rendered":"<p><strong>By Vincent Parker<\/strong><\/p>\n<p>Contracts for Difference and Futures are both forms of financial  derivatives. A financial derivative is an instrument whose value is  derived from the underlying asset. In the case of CFDs and futures, the  underlying asset may be a stock, bond, commodity or more. But the most  common underlying asset for both CFDs and Futures is shares. There are  three core differences between futures and CFDs. Liquidity, expiry dates  and financing.<\/p>\n<p>Liquidity is a standard issue for basically all futures exchanges except  for the giant that is OneChicargo &#8211; the largest futures exchange in the  world. Futures markets have become famous for slipped trade executions  (slippage) and bad execution. This is because of the lack of volume  associated with the trades. As futures are exchange traded products  there is sometimes no counter party to execute the trade at the  appropriate level, causing sporadic movements in the price of the  future.<\/p>\n<p>CFDs however have almost infinite liquidity because they are (mostly)  not an exchange traded product. You are guaranteed to complete your  opening order at the price you requested and that was displayed by your  broker. While there is some slipped trade executions, this is usually  due to synthetic price determination, not lack of liquidity.<\/p>\n<p>Expiry Dates are another big difference CFDs have to futures. Expiry  dates exist on futures because in the traditional sense, this is the  date that the asset has to be delivered and the agreed price. Since most  futures contracts are closed out before the expiry date occurs, the  asset doesn&#8217;t physically get delivered but technically there is still  one in place. This supports the financial markets and allows people who  actually want to own the share (or other asset) the ability to obtain  it.<\/p>\n<p>Finally, financing is another differentiator between futures and CFDs.  They are both leveraged products where there is a borrowing element  involved in the purchase and interest is either paid or earned but CFDs  are more like purchasing a share with a loan from the bank while futures  have their leveraged components priced into the asset.<\/p>\n<h3>About the Author<\/h3>\n<p>123CFD is a resource for <a href=\"http:\/\/123cfd.com\/\">contracts for difference<\/a> where we cover topics like <a href=\"http:\/\/123cfd.com\/trading_plans\/\">CFD Trading Plans<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Contracts for Difference and Futures are both forms of financial derivatives. A financial derivative is an instrument whose value is derived from the underlying asset. In the case of CFDs and futures, the underlying asset may be a stock, bond, commodity or more.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-14381","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/14381","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/comments?post=14381"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/14381\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=14381"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=14381"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=14381"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}